The purchase consideration that is lower than the net asset implies that; the buyer has gained the advantage of?
A. net income B. revenue reserve C. capital reserve D. net loss Correct Answer: Option C - capital reserve Explanation Capital reserve is derived from the accumulated capital surplus of a company, created out of capital profit.
When a share valued at 50k is issued at #1.59; it is said to be issued at?
A. par B. premium C. discount D. interest Correct Answer: Option B - premium Explanation Issue of shares at premium means that the issuing of shares above the face value (also called as nominal value or par value). Simply put, when shares are issued at a price higher...
In a partnership account; interest on drawings is?
A. debited to appropriation account B. credited to appropriation account C. treated as an expense in profit and loss account D. recorded in the balance sheet as current assets Correct Answer: Option B - treated as an expense in profit and loss account Explanation...
A partnership’s internal regulations are set out by?
A. a deed B. a law C. a constitution D. an article Correct Answer: Option A - a deed Explanation A partnership deed, also known as a partnership agreement, is a document that outlines in detail the rights and responsibilities of all parties to a business operation. It...
The amount paid by a new partner on admission as a compensation for the reputation built up by old partners is a?
A. bonus B. commission C. premium D. goodwill Correct Answer: Option D - goodwill Explanation Goodwill in accounting is an intangible asset that arises when a buyer acquires an existing business. Goodwill represents assets that are not separately...
Prime cost consist of _____?
i. Direct materials ii.Direct labour iii.Direct expenses iv. Factory expenses A. i, ii and iii B. i, ii and iv C. i, iii and iv D. ii, iii and iv Correct Answer: Option A - i, ii and iii Explanation Prime cost is the direct cost of a commodity in terms of the...
Which of the following expenses relates to the profit and loss account of a manufacturing firm?
A. Direct materials B. Direct labour C. Administrative overhead D. Work-in-progress Correct Answer: Option C - Administrative overhead Explanation Administrative overhead is those costs not involved in the development or production of goods or services. This is...
Which of the following is accounted for in receipts and payment account?
A. Subscriptions received in advance B. Subscriptions due not yet received C. Accrued expenses on annual dances D. Depreciation of the club house Correct Answer: Option A - Subscriptions received in advance Explanation A receipts and payments account is a summary of...
In manufacturing account; the work-in-progress at the end of the year is?
A. deducted from the cost of goods completed during this year B. added to the cost of goods completed C. stated in the profit and loss account D. stated in the prime cost section Correct Answer: Option A - deducted from the cost of goods completed during this year...